Charbel CJ Pty Limited v Owners Corporation Strata Plan 69470

Charbel CJ Pty Limited (the first appellant) and another party (the second appellant) appealed to the Court of Appeal of New South Wales against orders made by Burchett A-J. The dispute concerned the interpretation and enforceability of a provision within a Strata Management Statement registered for a strata building. The Owners Corporation Strata Plan 69470 (the respondent) alleged that the appellants, who were lessees of commercial lots, were using their lots as fast food outlets, which was prohibited by the Strata Management Statement.

The primary legal issues before the Court of Appeal were: (1) the proper construction of the Strata Management Statement, specifically whether the obligation not to use commercial lots as fast food outlets imposed a restriction on the owners of the lots or extended to their lessees; and (2) whether the lessees were in breach of a covenant contained in s 28W(2)(b) of the *Strata Schemes (Freehold Development) Act 1973* (NSW). The court also considered whether leave should be granted to raise a point not taken in the court below.

The Court of Appeal allowed the appeal, finding that the obligation in the Strata Management Statement did indeed extend to lessees. The court reasoned that the purpose of the Strata Management Statement was to regulate the use of the lots for the benefit of all owners and occupiers, and that a restriction on the use of a lot would be rendered ineffective if it only applied to the proprietor and not to those to whom the proprietor leased the lot. The court applied principles of contractual interpretation to the Strata Management Statement, treating it as a document that created rights and obligations akin to a deed or a covenant.

Consequently, the court set aside the orders made at first instance and substituted new orders. These new orders restrained the appellants from causing or permitting smells, fumes, or gases to be discharged from their respective premises in a manner that unreasonably interfered with the use and enjoyment of the shared areas of the building, other retail shops, or the residential flat building, as defined in the Strata Management Statement. The court also made orders regarding the costs of the proceedings.